Q. Where does China stand in the list of priorities for you in terms of developing relationships and bringing the benefits Zacatecas has to offer to market?

A. It is a high-priority relationship, which I am pretty sure it can reach a great degree of mutual benefits for both parties (involved). Our main competitive advantages are: our strategic geographical location, as well as our great connectivity (air, land and railway connectivity); also, our skilled labour force and liaison with the main education instututions, both at technician and professional level.

Q. What sectors in Zacatecas are the most attractive for Chinese investors currently, and what incentives does the state government have in place to facilitate inbound investment?

Incentives that state government has in place to facilitate inbound investment: Soft-Landing Program, Government committed to facilitate establishment of new foreign investment to the state, providing legal security (guaranteed), Recruitment and Training Scholarships for newly-hired employees during initial phase of company, Cash Incentive of up to 10% of the total investment project, depending on the company’s project general overview and planning.

Q. Are there any inaccurate preconceptions about investing in Mexico that you have noticed while meeting with potential investing companies from China? If so, how do you overcome these?

A. Probably, that until recently, China wasn’t such a priority from a perspective of developing relationships aiming to attract Chinese investment to Mexico, possibly because of the close commercial relationship historically in place between Mexico and the United States of America. However, in the current global context, this can be somewhat easily overcome, by having an adequate and upfront approach with Chinese companies, just as it occurred during this trip to China with the objective of fostering long-term relationships with a vision to establish new investment from China in Zacatecas, while reaffirming Chinese companies’ directors, of our State government’s high-priority focus on China and its great potential, in terms of business and FDI (Foreign Direct Investment).

Q. How developed in the workforce in Zacatecas, and in which sectors?

A. Our main strengths are in the following key sectors: metal-mechanical, agribusiness and information technologies (IT), due to the importance of such sectors to the economy of the State and the history of success within the economic development of the state of Zacatecas.

Q. Does the current US government administration have any positive or negative impact on the capabilities for overseas investing companies to base their distributions hubs for North America in Mexico?A. This situation has a positive impact on the capabilities for overseas investing companies, to transfer distribution hubs from the United States over to Mexico, due to a more welcoming atmosphere for business-making in Mexico and a total commitment from the government to support and attract foreign investment, providing adequate framework and infrastructure.

Q. What are your long term objectives for building a strong relationship between the state of Zacatecas and China?

A. To become China’s strategic partner in Mexico, as some sort of an entry through our state, to obtain presence of Chinese companies in Mexico (by gaining first access and presence in Zacatecas); thus, establishing a mutually beneficial and long-term relationship, analyzing potential opportunities for new investment, based on the state’s main competitive advantages, and also, focusing as a first step in the State’s key sectors: Automotive, Renewable energies, SPV and Eolic parks, Mining, Agribusiness, Information Technologies (IT) and Metal-Mechanical.

Q. How does the Ministry of Economy currently support inbound investment in Zacatecas? What initiatives are in the pipeline?

A.The State Ministry of Economy is currently supporting inbound investment in Zacatecas.througha series of key actions in this matter, such as the following: a) Soft landing: Personalized support and follow-up on main procedures required upon establishment and initial phase of a new investment project for the state of Zacatecas. b) Recruitment support andgranting training scholarships for newly hired workers (for a 60-day period). c) Cash incentive to ease the company’s establishment in Zacatecas. d) Incentive for specific and specialized training outside Mexico. Initiatives in the pipeline: Tax, tariffs and contributions rebatesover state taxes,currently under revision.

Q. What economic and other businessbenefits does Zacatecas offer over other states in Mexico for newly investing companies?

The State of Zacatecas is offering key benefits to effectively attract Foreign Direct Investment, aimed to helpnew companies in the search for crucial elements for the company, such as: conducting query for the required supply chain for its start-up, as well as possible customers to increase a local market share… and support in recruiting and selection of human capital with specific profiles, such as: engineers and technicians. The State Government of Zacatecas also provides a possible cash incentive, which can be granted as long as the company’s Planning for Investment and Employment Program Overview meets a series of requirements; based on such planning overview, there is an analysis to determine an amount which may be of up to 10% of the total amount of investment on behalf of the company, which can be provided for productive investment. Additionally, Zacatecas can provide legal security environment for all the investment derived from establishing a new company, along with our state’s government commitment to maintain favorable conditions for the competitiveness of companies and their local growth. Partly, by focusing on completinga high-quality infrastructure in order to meet new company’s demands in terms of logistics; also, by relying on efficient links between academia, industry and government in order to ensure an adequate synergy among these main players, to create the conditions necessary for companies with new investment projects to allocatethem successfully in Zacatecas. Zacatecas has a state governmentwith a pro‐business and investment focus, and that is the reason why our aim is to have all the required elements that foreign companies are seeking for in order to choose Zacatecas as their best option for their project.

A.HARBOR MINING LTD.: a Mexican-Chinese mining company of recent creation, incorporated in the State of Zacatecas.Its main activity is the exploitation, extraction, processing and marketing of Manganese, mainlyto the Asian market while looking into the possibility of selling surplus in the domestic market. * Main foreign key customers: CYMCO from China.

Q. How easy is it to register a new company in Zacatecas, and what is the timeframe?

A. It is quite easy relatively to register a new company in Zacatecas; Timeframe and procedures: * It is necessary to verify the availability of the desired company name, in the Ministry of Foreign Affairs (SRE, Secreatría de RelacionesExteriores). - With these documents, it is necessary to go with a Public Notary to register the Incorporation Documents for the new company, by the shareholders or by some representative from the company authorized to undertake this procedure by Power of Attorney. - Next, one must proceed to register the company in the Income Tax Office (SAT, Secretaría de AdministraciónTributaria) bureau, which is the equivalent to the Income Revenue/Tax Office; afterwards, with this Income Tax Office (RFC, for its acronym in Spanish) registration code obtained, one must register this code online on the SAT website. These are the main steps to register and enable a new company, to function and fully operate in Zacatecas. The time frame to have all this ready is 15.5 days.

Q. How does the infrastructure of Zacatecas benefit companies using the region as a distribution hub?

A.The infrastructure of Zacatecas benefits companies using this region as a distribution hub, greatly due to its strategic geographical location and excellent road connectivity, being close to the country’s capital city as well as main cities; the distances to these main cities are: * Mexico City (625 km.), * Guadalajara (317 km.), * Monterrey (450 km.), Querétaro (410 km.);

And also to the main seaports: - On the Atlantic: Veracruz (1037 km.) and Altamira in Tampico (618 km.) - On the Pacific Ocean (Mazatlán (607 km.), Manzanillo (650 km) and Lázaro Cárdenas), along with connectivity and proximity to the main border cities with the United States.

Zacatecas is an automotive hub, to the adjacent Bajío region (states of Aguascalientes, San Luis Potosí, Jalisco and Guanajuato) and to the north with the state of Coahuila.

AIR CONNECTIVITY:

Direct National flights. Zacatecas City to the following destinations: Mexico City and Tijuana, BC.

Direct International flights. Zacatecas City to the following destinations: Dallas, Texas; Los Angeles, California; and San José, California.

RAILWAY CONNECTIVITY:

FERROMEXis the only main railway network covering the state of Zacatecas, with a total network of674.90 kms. within the State. - This railway enters from the north coming from the border city of Cd. Juárez Chihuahua and the city of Torreón, Coahuila, to enter the state by the location of San Isidro/Estación Camacho (in the state limits with Durango and close to Coahuila); this railway continues south to the until reaching the municipality of Cañitas de Felipe Pescador, Zacatecas, where it continues as a railway that goes in direction to the South, passing through the municipalities of: Fresnillo, Calera (where the Airport Industrial Pak is located), Morelos Industrial Park, next by the cities of Zacatecas and Guadalupe, and continues south by the location of San Jerónimo, before reaching the state limits to the south with Aguascalientes (with the town of Cosío, Aguascalientes) andexiting in direction to the city of Aguascalientes, always by the FERROMEX main railway. - After passing through the state of Aguascalientes entirely by the FERROMEX network, until reaching Celaya, Guanajuato, where it changes and connects to the KANSAS CITY SOUTHERN (KCS) railway network, passing through the Bajío region to the city of Querétaro until reaching Mexico City. - Upon arriving from the city of Aguascalientes, the FERROMEX railway enters Zacatecas through the town of Loreto, Zacatecas (in the state limits with Aguascalientes to the south passing the state until reaching through the town of Salinas de Hidalgo, San Luis Potosí, heading in direction to the city of San Luis Potosí, SLP; afterwards, this FERROMEX railway changes and connects with the KANSAS CITY SOUTHERN (KCS) railway network, in direction to the city of Saltillo, Coahuila in direction to the north, passing through the city of Monterrey, NL to end in the border cities of Nuevo Laredo, Tamps. With Laredo, Texas; and Reynosa, Tamps. With McAllen, Texas.

* Also, a new Strategic Inbond facilityis currently in the process developing for next year (2018)in order to facilitate and expedite storage, (logistics) and customs procedures.

Q. What are your time-specific goalsfor job creation in Zacatecas, and which sectors are of primary focus for development?

Investment of US$ 328.9 billion in renewable and clean energy in 2015, growth by 4%

Dubai, UAE, 6 March 2016: HE Sultan Bin Saeed Al Mansoori, UAE Minister of Economy has hailed the UAE, as a safe and sought-after investment magnet, due to its security and safety elements and political stability, in the midst of the region’s political and economic tensions. He further said that the UAE’s advanced infrastructure and strong legislative system has boosted its position as a unique destination for Foreign Direct Investment (FDI).

HE Al Mansoori pointed out that the Ministry aims to increase the contribution of FDI to 5% of the country’s GDP over the next five years, in line with the goals of the National Agenda of UAE Vision 2021. He said that new and renewable energy sectors were key to attracting foreign capital to the UAE in the coming period, due to the giant projects implemented by the UAE Government, mainly in renewable energy and retail.

HE Al Mansoori explained that the UAE realised the need to diversify its economy with less reliance on oil sector. Many years ago, the UAE began to lay the foundations of a strong and competitive business environment, while sealing a number of trade cooperation agreements, taking advantage of its geographical location which links it to more than 220 markets around the world. He revealed that the ministry is currently working on an FDI law which would regulate guarantees, incentives, and clarify institutional framework.

He pointed out that the accumulated foreign investment in the country had increased by the end of 2015 to USD 126 billion, compared to USD 115 billion at the end of 2014, supported mainly by increased investments in manufacturing and heavy industries, such as aluminum and petrochemicals, as well as other sectors like tourism and aviation. The increased FDI resulted in taking the UAE to No. 1 rank regionally and 22nd globally in the World Investment Report 2015.

Stressing the importance of Annual Investment Meeting, he said it serves as a unique platform to promote investment in various priority sectors, as well as provide a direct meeting point for government delegations, and competent institutions, because it is attended by many dignitaries, officials and delegations from several countries. The event presents an ideal platform for fostering partnerships in public and private sectors.

Dawood Al Shezawi, Head of AIM organising committee, said that despite the significant decline in oil prices globally, which is a challenge for oil production companies, it represented a great opportunity for many companies, due to the lower costs of raw materials and the increase in demand for products leading to higher profitability margins.

Decline in oil prices was good news for the world's most oil importing countries, mainly India, China and European countries. Also, the US refineries benefited from this decline, while the drop was a big challenge for the countries producing and exporting oil.

Al Shezawi added that the theme of the 6th Annual Investment Meeting is “The New World of FDI, Key Features and Best Practices”. The event will help companies to understand the dynamics of world markets in light of the significant decline in oil prices. It will also help investors understand how to take advantage of this downturn, and help to develop well-defined investment strategies.

With the decline in oil prices in global markets and reduced spending by international oil companies, investment in renewable and clean energy sectors is on the rise. According to Bloomberg, 2015 was the year of the installation of renewable energy capacity in the world, where both wind and solar PV saw around 30% more capacity installed worldwide. The wind total for last year is likely to end up at around 64GW, followed by solar at 57GW. Clean energy investment surged in China, Africa, the US, Latin America and India in 2015, driving the world total to its highest figure of $328.9bn, up 4% from 2014 revised $315.9bn and beating the previous record set in 2011 by 3%.

The latest figures from Bloomberg New Energy Finance show dollar investment globally growing in 2015 to nearly six times over 2004 total and a new record of one third of a trillion dollars, despite four factors that might have been expected to restrain it: further declines in the cost of solar photovoltaics (allowing more capacity to be installed for the same price); strength of the US currency (reducing the dollar value of non-dollar investment); continued weakness of the European economy, formerly the powerhouse of renewable energy investment; and perhaps, most significantly, the plunge in fossil fuel commodity prices.

Kazakhstan underscores the importance of the UAE participation at forthcoming Expo Astana 2017

Dubai, UAE, 28 February 2016: HE Kairat Lama Sharif, the Ambassador of Kazakhstan to the UAE emphasized the importance of strong UAE-Kazakhstan relations, revealing that the UAE investments in Kazakhstan crossed AED 2 billion according to the Kazakhstani Ministry of Investment and Development. He elaborated that trade exchange recorded USD 135 million by the end of 2015.

HE Lama Sharif unveiled that Kazakhstan is willing to extend the validity of the UAE visitors stay to 30 days, instead of the regular 15-day permit. This is in addition to the fact that UAE nationals are exempted from visa to Kazakhstan since July 2014.

This was revealed on the sidelines of a delegation visit headed by HE Lama Sharif to Dawood Al Shezawi, President of Annual Investment Meeting (AIM), one of the world’s leading Foreign Direct Investment (FDI) - focused platform. AIM Higher Organising Committee, in collaboration with the Embassy of the Republic of Kazakhstan to the UAE, presented to around 70 of Kazakhstani businessmen and investors details about 14 additional investment activities to be added during the 6th edition of AIM, calling them to take part in the region’s most prominent FDI event.

HE Kairat Lama Sharif assured their eagerness to facilitate Kazakhstani delegations to attend AIM annually, pointing out that the Kazakhstani participation in the 6th edition of AIM will be of broader scale. HE Lama Sharif revealed that the city of Almaty, the largest city and financial center in Kazakhstan, is seeking to establish bilateral relations with Dubai Municipality to help businessmen in Kazakhstan to activate economic relations with Emirati investors.

HE Lama Sharif says Kazakhstan sees great importance in UAE presence in Expo Astana 2017, which will be held in the capital ‘Astana’ from 10th of June until the 10th of September 2017. “The expo's official theme "Future Energy" will be on focus, so we see the UAE as an essential participant in this event, in the sense that the country will be hosting the World Expo 2020. The UAE is home to the IRENA – The International Renewable Energy Agency regional headquarters, and has prominent projects in this domain. In addition, Astana city will host the ‘Astana Expo-2017’ in conjunction with the opening of the Abu Dhabi Plaza, a development that is expected to be the tallest building in Central Asia,” added HE Lama Sharif.

During his speech at the UAE–Kazakhstan Business Matching, Dawood Al Shezawi, President of AIM, called for larger Kazakhstani presence in the forthcoming global event. He stressed on the importance of Kazakhstan to participate in AIM this year by doing a Country Presentation, pointing out that Kazakhstan has recorded strong presence over the past years and provided many promising investment opportunities in the FDI sector. “We look forward to further collaboration, and share the same vision in building diversified, sustainable and knowledge-based economies,” he added.

More than 15,000 attendees from over 140 countries will take part in the 6th edition of AIM, that will be held under the patronage of HH Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai. According to Al Shezawi, participating in AIM will enhance opportunities for investors and companies from Kazakhstan to strengthen their presence in the UAE, the region and the world, and will enable Kazakh companies to establish new partnerships and expand its business in global markets through Dubai.

He added that AIM is the first event of its kind in the Middle East region in terms of presenting wide number of investment opportunities in a single platform. It plays a dominant role in promoting investment in emerging markets and fast-growing economies. He pointed out that the AIM works to stimulate FDIs across the world markets, contribute to strengthening the countries' economies, and establish partnerships in various sectors and fields.

The event also witnessed participation of a delegation from the city of Almaty, the largest city in Kazakhstan, seeking to establish bilateral relations with the UAE in sectors such as energy, oil, real estate, infrastructure, telecommunications, transportation and logistics.

The Business Matching, which was also attended by businessmen from the UAE, saw series of presentations related to AIM 2016. Various aspects and investment opportunities in both countries were highlighted.

China today is translating its expanding wealth into global economic clout. The Country last year overtook the U.S. as the world biggest trading nation. However, China manufacturing industry which has long been the economy major engine is struggling. In order to support the growth of their economy, China is seeking natural resources, energy, food and markets for its products outside the country.

President Xi Jinping expressed last year a primary goal to reform the economy by liberalizing financial flows and encouraging Chinese companies to invest more outside of China. As a result, deals done by Chinese firms are steadily rising in profile and size. China has already invested huge sums in its own infrastructure. The Chinese government has now prioritized allocating a major portion of the $3.8 trillion in reserves toward overseas investment with a key focus on Africa, India and the United States.

China investment strategy is different for each country. In the case of Africa, it is building the initial infrastructure of pipelines, railroads and ports to gain favorable access to Africa vast resources securing energy, labor resources and new markets for its manufacturer products. In India and the United States, China is navigating the political and business climates of two of the largest economies in the World. If successful, Chinese firms will be allowed to participate in over $9 trillion of infrastructure projects planned over the next several years in India ($1 trillion) and the U.S. ($8 trillion).

Africa

A core focus of China investment interest has been the nation of Africa. Africa has about 40 percent of the global reserves of natural resources, 60 percent of uncultivated agricultural land, the growing purchasing power of a billion people and a low cost wage environment. The continent has the fastest-expanding labor force in the world with more than 500 million people of working age. In the next 25 years, Africa will have just as much workers as China and India.

The logistics infrastructure in Africa is very inefficient. It is very costly and difficult to get transport flowing within African countries, not to mention across the borders. Poor infrastructure and lack of funds to develop modern transportation systems hinders efforts at creating efficient supply chains to seamlessly flow goods in and out.

Africa suffers from the lack of a centralized transportation infrastructure as well as a lack of major ocean ports and air transport hubs outside of South Africa and the Suez Canal.

Beyond the ports, less than one-fifth of Africa's road network is paved. According to the International Monetary Fund, the trade barriers between countries and lack of transport integration limited the growth rate in sub-Saharan Africa for 2013 to 5.3%.

However, China is forging alliances with Africa Leaders and making infrastructure investments in order to leverage the tremendous resource and economic potential in Africa

In March 2013, Tanzanian President Jakaya Kikwete and Chinese President Xi Jinping signed 16 agreements for development projects on mainland Tanzania, and three agreements for Zanzibar.

The deals clear the way for China to finance and build a $10-billion port at Bagamoyo. China has committed to a $500-million installment in 2013 to initiate the port project. The Port is scheduled for completion by 2017 and will increase capacity from 800,000 TEU to 20 million TEU.

Tanzania is one of the focal points of the Chinese globalization strategy in Africa. Recently, enormous natural gas reserves of an estimated 40 trillion cubic feet were discovered off the Tanzanian coast. The China National Petroleum Company is currently installing a 532-kilometer (333-mile) pipeline from the port city of Mtwara to Dar es Salaam.

"Our relations are at a new historic beginning," the Chinese president told his Tanzanian hosts. He noted that Africa is one of the world's fastest-growing regions, pressing forward like a "galloping lion." Xi reminded his hosts of the warm relationship between the Great Chairman Mao Zedong and Tanzania's first president, Julius Nyerere. He also praised the two countries' shared struggle against imperialism and invoked the common interests of all developing countries. "We are true friends," he said. "We treat each other as equal partners."

n return for developing the infrastructure, China has received lucrative licenses to exploit natural resources and fossil fuels. For instance, Angola is almost as large as Saudi Arabia as one of China's key oil suppliers. Angola is China's top African supplier of crude, and China buys 43.8 percent of Angola total oil exports. The bilateral trade between the two countries exceeded $120 billion in 2010 according to China Briefing.

In addition to oil-related projects, China is heavily involved in Angola reconstruction effort, after a devastating 27-year civil war that ruined much of its infrastructure. ne of the main investments is the rebuilding of the Benguela Railway, an 840-mile transcontinental railway that links the Atlantic Port of Lobito in Angola with rail networks in the Democratic Republic of Congo and Zambia. The project is expected to cost $300 million./span>

Since 2000, trade volumes between China and Africa have grown twentyfold, reaching $200 billion in 2012. China has become Africa's most important trading partner.

India

India's massive infrastructure requirements offer several opportunities to China. Over the next five years, India is planning infrastructure investment of $585 billion.

A Chinese working group submitted a five-year trade and economic planning cooperation plan to the Indian government in the first week of February, offering to finance as much as 30 per cent of the $1trillion targeted investment in infrastructure during the 12th Five-Year Plan (2012-17) of about $300 billion. Although the largest by any one country, China is facing serious political obstacles.

he Union Home Ministry and the Department of Economic Affairs have cautioned the government regarding relaxing the Foreign Direct Investment (FDI) norms in the Indian Railways. In its comment on the proposal of the Department of Industrial Policy and Promotion (DIPP), the home ministry, citing security concerns, said Chinese investments in such a sensitive sector should be viewed with caution.

The home ministry has pointed out that China is India's main rival on the economic front and the two countries have unresolved border disputes. Sources said FDI from a neighboring country in a core sector, like the railways, may pose a danger to national security. The ministry also clearly stated that Chinese investments should not be allowed in border areas such as Jammu & Kashmir and the North Eastern states./span>

While India and China are targeting $100 billion in bilateral trade by 2015, the balance is heavily skewed in favor of China. At the end of fiscal 2012-13, China's trade surplus with India was about $39 billion. China doesn't see this narrowing in the short to medium term due to the nature of the two economies, with India being services led and China a manufacturing economy.

A tremendous opportunity exists for China manufacturers to set up plants in India. From a labor perspective, the average monthly wage of a Chinese worker in Shanghai is $275 while in Mumbai the average monthly wage is $81 per month (e.g., three times less). China no longer has the inexhaustible supply of young workers who formed the backbone of its manufacturing revolution. This has led to a sharp increase in manufacturing costs in China - which have risen 40 per cent in the last five years.

he World Bank ranks India 134th out of 183 countries in terms of ease of doing business and ranks the country's logistics performance 46th out of 154 countries. By contrast, the United States and China ranked 5th and 79th, respectively, for ease of doing business and 15th and 26th for logistics performance. Several promising infrastructure improvements are underway to support logistics. These include the Golden Quadrilateral, North-South Corridor and East-West Corridor (roadways); Pipavav, Mundra and Hamra ports; and Bangladore, Hyderabad, New Delhi, and Mumbai airports. Furthermore, the Indian government plans major investments that will triple the country's cargo handling capacity at 12 major ports, with the goal of being able to handle three billion tons per year by 2020[iv]

China manufacturers should draw on the geographic benefits, labor savings and logistics infrastructure, by setting up facilities in India. Most importantly, the increased localized presence of the Chinese firms should bode well in securing infrastructure projects and growing sales in India.

United States

wo-way infrastructure investment has emerged as one of the most promising opportunities to spur economic growth and job creation in both the United States and China,U.S. Chamber President and CEO Thomas J. Donohue said. his type of investment would benefit both of our countries, strengthening our relationship and enhancing global stability and prosperity./span>

At a minimum, more than $8 trillion in new investment will likely be needed in U.S. transportation, energy, and wastewater and drinking water infrastructure from 2013 through 2030otaling some $455 billion per year.

According to data from the American Enterprise Institute and Heritage Foundation, Chinese outward investment reached $85 billion in 2013, a dramatic increase from a mere $10 billion in 2005. The U.S. has been the No.1 destination, luring more than $14 billion of investment last year alone.

hereas state-owned companies have dominated in total deal value in the past, that is no longer true. In 2013, more than 70 percent of investment came from private enterprises, responsible for more than 80 percent of a total of 87 deals (of which 44 were acquisitions and another 38 were greenfield projects). Where is the money going? Unconventional oil and gas was a top draw, with $3.2 billion invested in deals that include CNOOC (CEO) purchase of Calgary, Alberta-based Nexen Energy U.S. operations, Sinopec (SHI) joint venture with Chesapeake Energy (CHK) of Oklahoma City, and a Sinochem International (600500:CH) stake in West Texas Wolfcamp Shale. Commercial real estate was also a big draw, with 18 investments in San Francisco, Los Angeles, New York, and Detroit totaling $1.8 billion. And the single biggest deal: Shuanghui (000895:CH) $7.1 billion takeover of pork processor Smithfield

In January 2014, Ohio officials announced that Fuyao Glass Industry Group, a maker of windshields and windows for automobiles, would acquire about 1 million square feet of the GM truck assembly plant in Moraine, OH. Fuyao Glass will make an investment of $200 million at the site in total to get it ready for production.

It is the largest Chinese investment yet in Ohio and one of the largest ever in the US. The plant is expected to begin operations in 2015, employing about 800 people within three years.

For Chinese companies like Fuyao Glass, the U.S. has become a better, less expensive place to set-up manufacturing. The company said Ohio's location was selected based on logistics cost, quality of workforce as well as the business environment.

Founded by Cao in 1987, Fuyao has captured 20 percent global market share for auto glass. Company chairman Cao Dewan said "This investment is actually due to the demand of our customers. And they believe we should be here, because we provide a large percentage of their products."

t could be the biggest role reversal since, well ... when Nixon went to China. The gap between manufacturing costs in the U.S. and China is shrinking explains John Ling, a naturalized American from China who runs the South Carolina Department of Commerce's business recruitment office in Shanghai.

Today some 33 American states, ports, and municipalities have sent representatives like Ling to China to lure jobs once lost to China back to the U.S. Besides affordable land and reliable power, states and cities are offering tax credits and other incentives to woo Chinese manufacturers. Beijing, meanwhile, which has mandated that Chinese companies globalize by expanding to key markets around the world, is chipping in by offering to finance up to 30% of the initial investment costs, according to Chinese business sources.

In August 2013, the World largest retailer, Walmart, held its first U.S. Manufacturing Summit, attended by 500 suppliers, 34 states, 8 governors and government officials, who met to discuss opportunities to create jobs, restore communities and drive economic growth within the United States. Following the Summit, Walmart made a commitment to buy an additional USD $250 Billion over the next 10 years in products from American manufacturers.

A key presentation was made during the Summit in which Hal Sirkin, Managing Director, Boston Consulting Group, provided the following illustration of the shrinking gap between labor costs in China versus the U.S.:

The ade is the USAtrend is not simply patriotic, but also driven by the changing factors of labor cost, lower inventory carrying costs and the strength of the world most advanced transportation network.

As Fuyao Glass recognized the benefits of purchasing an existing plant in the U.S., other Chinese manufacturers should seriously consider investment or acquisition of U.S. based facilities or firms. The current political environment in the United States is supportive of outside investment.

China has done an excellent job in pear headingdevelopment in Africa. In contrast, China needs to further encourage their companies to embrace a greater global supply chain vision by establishing more local operations in China and India enhancing growth and profitability.

David Alioto is the President & CEO of Probity Enterprises. Probity Enterprises is comprised of industry experts that provide management services to leading corporations in the United States & China. The Company has comprehensive experience in the rapidly evolving business climate for retail, manufacturing and supply chain solutions.

Invest In had the opportunity to interview Ms. Karolina Frischkopf, Deputy Head of the Switzerland Embassy Economic Section, and the Investment Promotion Director at the Swiss Business Hub, Mr.Laurent Knecht, about the future of investment of Chinese investors in Switzerland and the status of Switzerland becoming a major RMB center in the near future. Below is an outline of the conversation.

Q: With Switzerland signing America FATCA regulation, many global investors are worried Switzerland secrecy advantages are disappearing. Do you think this is true? And if so, what are some of the other major advantages that Chinese investors can acquire by investing into Switzerland wealth management sector and banking industry?

A: Ms. Karolina Frischkopf: Privacy and data protection are still main assets of Switzerland financial services industry. But we don accept that tax evaders take advantage of our system. We will exchange tax information with some countries bilaterally regarding the international standards. Switzerland other assets are the highly competitive service quality of its finance industry, the internationally diversified know-how, political stability, strong currency and legal certainty and we are a wealthy country in the middle of Europe without any debt troubles.

Q: Switzerland government in 2012 outlined a blueprint that stated that Zurich will become a RMB center by 2016. How will Switzerland RMB center be different and more attractive than London and Luxembourg? And where is the stage of development now on its transformation to becoming a RMB center?

A: Ms. Karolina Frischkopf: The ongoing internationalization of the Renminbi will lead markets for Renminbi worldwide to expand rapidly over the coming years. Several financial centers mainly in Asia and Europe, including Switzerland, are positioning themselves as Renminbi hubs - each one offering its respective strengths to foster this development. Switzerland is well-positioned in this regard. Due to its leading role in cross-border private wealth management, its expertise in managing institutional assets for pension funds, insurance companies, sovereign wealth funds, family offices and corporates and its niche as a leading center for commodity trading, the Swiss financial sector can support the further extension of Renminbi business overseas and thus foster trade and investment in China. The Swiss Government is committed to providing the necessary institutional framework for this development. The newly established financial dialogue with China provides a strong base for strengthening financial sector cooperation between our two countries. Furthermore, a currency swap agreement between the two central banks is on its way. Last but not least, we expect Sino-Swiss trade to receive a boost when the Free Trade Agreement with China takes effect. This should further support Switzerland development as a Renminbi hub.

Q: The free trade agreement that was signed last year between China and Switzerland is a milestone between the two countries governments and corporations. But how will the FTA attract Chinese high-net-worth individualscapital? Also, currently, according to my data, only 60 Chinese companies have set up shot in Switzerland. Has this number increased since the signing of the FTA? What are the number now and the forecasted number?

A: Mr. Laurent Knecht: The FTA will give additional impetus to the economic relations between China and Switzerland by stimulating trade and investment flows between the two economies. Our experience with existing free trade partners (currently 28 FTAs with 38 partners) shows thatdue to the improvedframework conditions and enhanced legal security created by FTAs, trade and investment grew faster with preferential partners in comparison to the overall average. This is also true for foreign direct investment.About 70 major Chinese companies set up in Switzerland and morenew projectsare exploredby Chinese investors (companies & entrepreneurs). Mr. Li Keqiang last year visit to Switzerland and the signingof theFTA certainlyenhanced the awareness of Switzerland as a good business location in Europe toward the Chinese business community.

Q: What are some other major advantages that Chinese investors can acquire by investing in Switzerland? Examples would be investing in real estate, businesses, or even in the banking center.

A: Mr.Laurent Knecht: In many respects Switzerland is a country with many attractive location advantages. This is shown, for example, in research and innovation, in the working conditions, infrastructure, the central location within Europe, in the economic-political environment and the standard of living. The fact that Switzerland is one of the most attractive business locations in the world is also proved by various rankings, which make clear statements about the competitiveness, innovation or the stability of a country. By investing in Switzerland any Chinese company or entrepreneur could benefit from those advantages which will befurther enhanced oncethe FTA between our two countries enters into force, probably in the course of the summer 2014.

Q: What is the future of Chinese investment in Switzerland? Do you see it continuing to expand in the near and long term future? Please elaborate.

A: Mr. Laurent Knecht: Chinese companies are developing at a fast pace and are eager to manufacture more complex products. As a consequence, China is today the third-largest R&D spender in the world only behind the USA & Japan and in this specific expertise Switzerland, as the most innovative country worldwide according to he Global Innovation Index 2013(INSEAD, Paris), would be an ideal location for any Chinese company for a research center. Besides, Chinese ODI to Europe has dramatically increased since 2007. This trend not only concerns acquisitions of European brands, knowledge and technologies as more and more Chinese companies are also present in Europe aiming at developing their activities and benefiting from European high-income consumers. Therefore, Switzerland will welcome moreaffiliates ofChinesecompaniesin the near future as well as see more well established Chinese companies in Europe setting up their regional headquarters in Switzerland which has proven to be a center of global and regional multinational headquarters.

Q: As a leading global resource platform of China cross-border investment and acquisitions, could you briefly introduce Ophoenix Capital business and your view towards this platform?

A: Ophoenix Capital is a Beijing and Detroit based leading investment and advisory firm focusing on global automotive industry,

With successful track records bridging capital and technologies between the world largest automotive market in China and the rest of the world. Dr. Dazong Wang, a well-known industry leader, led the founding of the firm after his career at General Motors, SAIC Motor, and Beijing Automotive Group, through which he has helped these leading automotive OEMs building, acquiring and integrating successful cross border businesses. Together with its strengths in transaction advisory, Ophoenix Capital rich resources and expertise in the automotive industry in both China and North America provide unique advantages in cross border deal sourcing, execution, integration and business growth.

Q: Ophoenix Capital has successfully mediated two Chinese firmsacquisition in Canada; do you think Chinese enterprises will further their investment overseas, especially in North America? Which areas of business do you think is of most interest to China?

A: A lot of research has been done in this area. In Squire Sanders2013 full year China outbound M&A review, North America and Western Europe are the top target regions by both deal volume and deal size in the past two years respectively. We believe this trend will continue in 2014.

China outbound M&As used to be driven by large state-own enterprises in the sector of energy and resources. We have seen more and more deals done by private companies in increasingly diversified industries including automotive, electronics, food and beverage, and internet. Especially for those private Chinese companies with access to capital, it is logic for them to expand product portfolio through technology acquisition and geographical coverage through market share acquisition.

For automotive, China and North America represent not only the largest two markets in the world, but also the must-have markets for any Chinese companies aspired to become global players. Potential synergies from the healthy market growth, technological competency, and well established know how in automotive industry in North America will continue to drive Chinese companies to look for M&A opportunities.

Q: In two recent cases, one of them being UniStrong $20 million investment in Canada Hemisphere, the world satellite navigation system is always based on the GPS of the United States. Could you explain the significance of this case as it relates to China demand for satellite navigation systems, and the technology based on China Beidou navigation system.

A: There have been multiple satellite based positioning systems used globally, e.g. Europe Galileo, Russia Glonass, US GPS. Any of these systems provides only limited and most of time inaccurate access to consumers. Most of the world non-military commercial application of positioning system requires support of at least two of these three different systems at the same time.

Unistrong has been a domestic application leader for all these three positioning systems as well as China Beidou Navigation Satellite System. The acquisition of Hemisphere not only strengthens Unistrong technology know how in multiple positioning systems but also bring its brand and long term customer relationship in many industries outside of China. It certainly expands what Unistrong can offer its customers globally, in both product types and quality.

The first Beidou satellite was in operation in 2000, much later than the other three positioning systems. Nevertheless, we have seen a wide use of Beidou in the past a few years with the strong support of both private and public sectors in China. We believe it will definitely be the one providing the most functionalities to customers in automotive and many other industries in China.

Q: In another case, China Wanfeng Auto Wheel acquired Canada Meridian, which made Wanfeng a world-class Magnesium Alloy parts company. We like to have your point of view regarding this acquisition.

A: Wanfeng Auto Wheel is a China market leader in lightweight applications in automotive industry. Adding Meridian Lightweight Technologies to Wanfeng is a natural extension of Wanfeng strategic position in lightweight technology globally.

In the past two decades, Wanfeng has grown to become the leader in aluminum alloy wheels with diversified businesses in automotive parts, automation, and new energy and materials. It has the largest manufacturing capacity for aluminum wheel in the world and its wholly owned subsidiary, the Shenzhen Stock Exchange listed Wanfeng Auto Wheel, earned 4.5 billion RMB in revenue in 2013. Its customers already includes most of the leading global automotive OEMs like BMW, Honda, Toyota, Volkswagen, GM, and Ford.

As a leading supplier of innovative lightweight cast metal solution provider, Meridian brings to Wanfeng the largest market share and capacity of magnesium die casting in automotive parts, and also a world recognized capabilities in magnesium die cast design, engineering and technology.

We see the combination of these two leaders making an even greater leader globally to help make cars lighter, safer, and environmentally friendlier.

Q: China auto production and sales is now ranked number 1 in the world, but the focus has always been on finished cars. Auto parts and cutting-edge core parts are very much dependant on imports. What do you think will be the breakthrough point for Chinese-made auto parts and their brand value?

A: We believe outbound M&A is a practical option for Chinese automotive OEMs and suppliers to move up in technology and brand value in global markets.

China automotive market has become the largest in the world in 2009 and it is expected to grow 8% annually on average in the coming five years, almost twice as the world average. The growth prospect in China motivates many domestic players to grow aggressively through acquisitions.

Many Chinese suppliers have been quite successful in both domestic market and oversea market in building solid foundations in technology, market access, and coveted customer base. These increasingly give them confidence in acquiring targets in a more developed market like North America.

Ophoenix Capital essentially enhances these domestic leadersoutbound M&A competence in selecting better matches with solid industrial logic, arranging the most fit deal structure, plan and execute proactive and comprehensive integration, and strategic partnership in business expansion in both China and North America.

Q: Many investors in China, especially those from the private sectors, are facing many problems accessing the Canadian market. As an experienced industry insider, from the angle of policy, what are your suggestions?

A: Like many other outbound target regions, Canada has its own requirements in regulatory approval and statutory procedures. Although being physically close to the US, for Chinese or any other foreign investors, Canada has its uniqueness in business culture, financial systems, legal systems, and political systems. These may also vary from province to province, from west coast to east coast. It is critical for potential investor to understand these differences when they select potential targets. We always advise potential Chinese investors to carefully select external advisers who not only know Canada well but also have solid experience working with Chinese investment in Canada.

In automotive industry, Chinese companies typically look for potential M&A targets in the US and Western Europe. Not as many Chinese companies know Canada has a fairly large and cost competitive automotive manufacturing base, as well as a vibrant R&D eco-system and a large skilled and diverse work force. In our view, Canada not only has a welcoming business culture for Chinese investors but also provides many highly competitive opportunities in technology, talent, brand, and cost.

I worked and lived in Vancouver, British Columbia for five years before and it was absolutely an incredible transforming experience for me. It is such a beautiful city offering so many choices in all sorts of activities. I could go on to different mountain trails for hiking every weekend. That is also the place I become an avid skier and snowboarder. In Chinese traditional Fengshui, the city of Vancouver is the most balanced city with its surrounding mountains, forests, and the Pacific.

The company I worked for was a Canadian subsidiary of a US company originally founded in Tucson Arizona but later acquired by Japanese giant Komatsu. We developed the world first commercially used autonomous dispatching system for open pit mines. So I know from my personal experience that Vancouver is among the most livable, open, international, business competitive cities in the world.

Yali Wei is a Director at Ophoenix Capital, with more than twelve yearsexperience of investment, strategy and business development in high tech industries in Canada, China and the USA. He earned his MBA from University of Toronto.

After a turbulent year of India economy, strong quarterly growth of figures and encouraging political developments appear set to make 2014 one of the most promising years for foreign investments in recent memory.

Driven by the expectation that Indian exports and investment demand will increase steadily alongside a pick-up in the global economy, Goldman Sachs and the Reserve Bank of India expect GDP growth will reach 5.5% in 2014 and maintain a pace of 7.5% over the next few years.

Making a strategic decision about investing in India requires both an understanding of the diverse options, and the recent changes in FDI policy that open several key business sectors to increase foreign investment.

Here we explore some important amendments to India FDI policy, and outline the various investment options for business establishment. And wel also look at several taxes that apply to wholly owned subsidiary companies and their operators.

Recent Changes in India FDI Policy

Amendments in India FDI policy last year (2013) opened a number of key business sectors to increase investment. Additional 2013 policy changes that alter the legal definition of control as pertaining to the determination of sectorial caps, as well as regulations for single and multi-brand retail trading are also important for foreign institutional investors (FII), and firms considering FDI.

FDI Routes and Forms

FDI into India falls under one of the two FDI routes:

Approval Routes for Foreign Investment

Government Route: For investment in business sectors requiring prior approval from the Foreign Investment Promotion Board (FIPB)

Automatic route: For investment in business sectors that do not require prior approval from the government, but the filing of a notification after the incorporation of the company and issue of initial shares

These distinctions are important when interpreting recent changes in foreign investment policy, as foreign investment caps and approval routes often vary by both industry and investor.

Unchanged FDI Caps

Sector/Industry

Investment Cap

Civil Aviation

49%

Defense

26%

Airports

74%+

Print Media

26%

Brownfield Pharmaceuticals

100%

Multi-Brand Retail

51%

Changes to FDI Caps and Approval Routes A comparison of the previous and revised policies in key Indian business sectors are outlined in the chart below:

Sector / Industry

Previous Policy

2013 Revised Policy

Investment Cap

Approval Route

Investment Cap

Approval Route

Commodity Exchanges

49% (FDI + FII) FDI Cap: 26% FII Cap: 23%

Government

49% FDI Cap: 26% FII Cap: 23%

Automatic

Power Exchanges

49% (FDI + FII) FDI Cap: 26% FII Cap: 23%

Government

49% FDI Cap: 26% FII Cap: 23%

Automatic

Asset Reconstruction

74% (FDI + FII)

Government

Up to 49%

Automatic

49% to 100%

Government

Insurance

26% (FDI)

Automatic

26% (FDI + FII)

Automatic

Telecom Services

Up to 49%

Automatic

Up to 49%

Automatic

Above 49% and up to 74%

Government

Above 49% and up to 100%

Government

Courier Services

100%

Government

100%

Automatic

Test Marketing

100%

Government

100%

Automatic

Petroleum Refining by Public Sector Undertakings

49%

Government

49%

Automatic

Defense Production

26% (FDI)

Government

26%

Automatic

Above 26%

Government

Changes in the Definition of ontrol/span>

A Changed definition of ontrolis also expected to apply to FDI in sectors where a sectorial cap currently exists. Prior to the 2013 amendments, companies were considered to be ontrolledby resident Indian citizens held 51% stake in the firm and had the power to appoint a majority of directors in that company.

Under the broadened definition of control introduced this year, ontrolnow includes not only the power to appoint a majority of directors, but also the ability to control the management or policy decisions via shareholding, management rights, shareholder agreements, or voting agreements. Indian citizens must exercise ontrolunder all limbs of this new definition for a company to be considered domestically ontrolled

Consequently, companies previously considered to be ndianmay now be viewed as foreign controlled and subject to FDI caps and other restrictions on downstream investment.

Investing

The issuance of shares by Indian companies falls under the compliance guidelines outlined in the Foreign Exchange Management Act (FEMA). Companies seeking capital through the public route should base the issuance price on SEBI guidelines. Unlisted companies seeking capital may not issue private shares at a price less than fair value based on the discounted cash flow method, and price will be determined by a SEBI registered merchant or chartered accountant.

The acquisition of unlisted shares by a non-resident from an Indian resident must be exchanged at market price based on the SEBI guidelines. Units operating in SEZs may issue shares at a price based on the valuation against the import of capital goods. This valuation must receive approval from a Development Commissioner Committee and the appropriate customs officials. Shares must be officially issued within 180 days of receipt of invested capital, or the funds must be refunded to investors.

Upon the issuance of shares to foreign investors, the issuing company has 30 days to file Form FC GPR, which outlines the company activities and relevant details, through the appropriate regional office of the RBI. A certificate declaring compliance with the Companies Act 1956 and Companies Act 2013, as applicable from time to time, shall be submitted at the same time. The issuing company shall also obtain a certificate confirming the price of issue is in line with the prescribed guidelines.

How to Set Up a Wholly Foreign-Owned Business in India

Establishing a Wholly Owned Subsidiary Under Indian Law, foreign investors are able to establish wholly owned subsidiary companies (WOS) in the form of private limited companies if they operate in sectors that permit 100 percent foreign direct investment (FDI). With India recent loosening of FDI caps, companies are now also able to establish WOS in the telecom services and asset reconstruction sectors. Establishing a private limited company can be a lengthy and complicated process involving multiple steps.

First, a minimum of two directors must be appointed and registered through India e-filing system for Director Identification Numbers (DIN). Minimum requirements for the establishment of a private limited company include the existence of two directors, two shareholders (who may be the same person as the directors), and a minimum share capital of INR 100,000 (1 Lakh).

Second, a suitable name must be selected that indicates the main objectives of the company, and submitted with the RoC along with a brief description of the business proposed functions to verify both the name appropriateness and availability. Upon successful name registration, the applicant company has 60 days to file its Memorandum of Association (MOA) and Articles of Association (AOA), and proceed with formal incorporation filings. Both the MOA and AOA must be stamped with the appropriate duty after the needed RoC fees and stamp duty have been paid, and both forms signed by at least two subscribers with a witness.

Within this 10-day time window, the following documents must also be filed with the Ministry of Corporate Affairs web portal along with the requisite filing fees:

Form 1 - Application for incorporation along with the MOA and AOA

Form 18 - Notice of situation for the registered office (proof of address, etc.)

Form 32 - Details of the company board of directors

Upon successful submission of the above documents, the RoC will issue a Certificate of Incorporation and a Corporate Identification Number (Corporate Identity). The process generally takes 7 to 8 weeks to complete, and private limited companies are permitted to commence business immediately following their successful incorporation.

Applicable Taxes While India has been liberalizing its governing policies since 1991, the country tax structure remains among the most complex and difficult to navigate in the world.

Understanding the wide variety of laws, regulations and procedures can be confusing for even the savviest of business operators. Foreign companies that do not seek specialized advice often end up overpaying on taxes or on the associated penalties and interest that go along with them. What follows is a brief description of the various taxes which should be taken into consideration when incorporating a private limited WOS company in India.

Type of Company

Taxable Income

Below INR 10 Million

Exceeds INR 10 Million

Exceeds INR 100 Million

Domestic Company

30%

32.45% (30% plus Surcharge of 5%, plus education cess of 3%)

33.99% (30% plus surcharge of 10 %, plus education cess of 3%)

Foreign Company

40%

42.02% (40% plus surcharge of 2%, plus education cess of 3%)

43.26% (40% plus surcharge of 5 %, plus education cess of 3%)

Tax on the Distribution of Dividends

Corporate entities are subject to a tax on the distribution of dividends. However, in the case of shareholder dividends, the associated income is exempt from tax. The current effective rate of the Dividend Distribution Tax is 16.995 percent (15 percent plus a 10 percent surcharge and an education cess of 3 percent). No exemption from payment of the DDT is granted for the profits relating to SEZ developers.

To avoid a situation of double taxation being created by the DDT, it is permitted that, for the purpose of computing the tax, any dividend received by a domestic company during any financial year from its subsidiary shall be allowed to be deducted from the dividend to be distributed. This is provided the dividend received by the domestic company has been subject to DDT and the domestic company is not the subsidiary of any other company.

Minimum Alternate Tax (MAT)All companies declaring low or zero profits are subject to the Minimum Alternate Tax (MAT). Presently, MAT is levied at 18.5 percent of book profits plus the applicable surcharges and education cess. The MAT is levied on companies whose tax payable under normal income tax provisions is less than 18.5 percent of book profits. Additionally, MAT is applicable to SEZ developers/units for income arising on or after April 1, 2012.

Taxation of Royalties/Technical FeesUnder domestic tax law, the royalties/technical fees that are payable to non-residents with a permanent establishment in India are taxed on a different basis compared to non-residents without permanent establishment in India. Concessional tax rates apply if the agreement relates to a matter that has been approved by the government of India. The payments made are subject to tax avoidance agreements entered into by the non-resident country.

Wealth Tax Wealth tax is calculated on March 31st of every year (referred to as the valuation date). Wealth tax is charged to both individuals and companies at the rate of 1 percent of the amount by which the et wealthexceeds INR 3,000,000.

The term et wealthis basically defined as the excess value of certain assets over accumulated debt. Assets include guest and residential houses, motorcars, jewelry/ bullion/utensils of gold and silver, yachts, boats, aircraft, urban land and cash in hand. A debt is an obligation to pay a defined sum of money arising from the assets included in et wealth./span>

Indirect Taxes

Customs Duty Customs duty is levied by the central government on the import and export of goods from India. The rate of customs duty applied to imported and exported products depends on its classification under the Customs Tariff Act. (CTA) In the case of exports from India, duty is levied only on a very limited list of goods. The Customs Tariff is aligned with the internationally recognized Harmonized Commodity Description and Coding System of Tariff Nomenclature promulgated by the World Customs Organization. The Indian central government has the power to exempt any specified goods from the whole or part of the customs duties.

In addition, preferential/concessional rates of customs duty are available under the various bilateral and multilateral trade agreements entered into by India. Customs duty is levied on the transaction value of the imported or exported goods. Under the Customs Act 1962, transaction value is the sole basis of valuation for the purposes of import and export. Although India has adopted general principles of valuation for goods that are in accordance with the World Trade Organization agreement on customs valuation, the central government has established independent Customs Valuation Rules applicable to the import and export of goods. India has no uniform rate of customs duty, thus duty applicable to any product is based on a number of components.

The types of customs duties are as follows:

Basic Customs Duty (BCD) - BCD is the basic component of customs duty levied at the effective rate stipulated in the First Schedule to the Customs Tariff Act, 1985 (CTA) and applied to the landed value of the goods.

Countervailing Duty (CVD) - CVD is equivalent to, and is charged to counter the effect of, the excise duty applicable on goods manufactured in India. CVD is calculated on the landed value of the goods and the applicable BCD.

Educational Cess (EC) - EC at 2 percent and Secondary & Higher Education Cess (SHEC) at 1 percent are also levied on the CVD. Further, EC at 2 percent and SHEC at 1% are also levied on the aggregate customs duties. An Additional Duty of Customs (ADC) at 4 percent is also charged.

Duties of Excise Central Value Added Tax (CENVAT) is a tax levied by the central government on the manufacture or production of movable and marketable goods in India. The rate at which excise duty is leviable on the goods depends on the classification of the goods under the Excise Tariff. The Excise Tariff is primarily based on the eight digits Harmonized System Code. The excise duty on most consumer goods is charged based on the MRP printed on the good packaging. Abatements are admissible at rates ranging from 20 percent to 50 percent of the MSRP for the purposes of charging Basic Excise Duty (BED).

Goods other than those covered by an MSRP assessment are generally charged based on the ransaction valueof the goods sold to an independent buyer. In addition, the central government has the power to fix tariff values in order to charge ad valorem (ccording to value duties on specific goods. Occasionally, notifications granting partial or complete exemption to specified goods from payment of excise duties are also issued. EC at 2 percent and SHEC at 1 percent are applicable on the aggregate excise duties.

The central excise duty is a modified form of Value Added Tax (VAT) where a manufacturer is allowed credit on the excise duty paid on locally sourced goods as well as on the CVD paid on imported goods. The CENVAT credit can be utilized for payment of excise duty on the clearance of dutiable final products manufactured in India. In light of the integration of the goods and services tax initiated in 2004, manufacturers of dutiable final products are eligible to apply CENVAT credit to the service taxes paid on input services used in or in relation to the manufacture of final products as well as on clearances of final products up until the point of removal.

VAT On April 1, 2005, the state level sales tax was replaced by VAT in the majority of the states in India. The states of Tamil Nadu, Pondicherry and Uttar Pradesh have all replaced the state sales tax regime with a VAT.

Under the VAT regime, the VAT paid on goods purchased within the state is eligible for VAT credit. The input VAT credit can be utilized against the VAT/Central Sales Tax payable on the sale of goods. This ensures that only the value addition is taxed. Currently, there is no VAT on imports into India. Exports are zero rated. This means that while exports are not charged VAT, VAT charged on inputs purchased and used in the manufacture of export goods or goods purchased for export is available to the purchaser as a refund. State VAT is charged at varying rates: 1 percent, 4 percent, 5 percent and 20 percent. Turnover thresholds have been implemented so as to keep small traders out of the VAT regime. A tax under a composition scheme, at a lower rate, may be levied on small traders in lieu of the VAT.

Service Tax Service tax was initially introduced in 1994 and was based on the positive list of services, wherein the specified services were made taxable. During the announcement of the 2012 budget, a new service tax regime was introduced wherein all services will be taxed unless they are specified within the negative list or are otherwise exempted.

The negative list of services means that all services, excluding those specified in the negative list, will be subject to service tax. However, in addition to items included in the negative list, there may be certain exemptions, abatements and composition schemes issued by the Central Board of Excise and Customs (CBEC).

Services in the Negative List Category 1. Services relating to agriculture by way of:

Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing

Supply of farm labor

Processes carried out at an agricultural farm and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market

Renting or leasing of agricultural machinery or vacant land with or without a structure incidental to its use

Services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce

2. Transmission or distribution of electricity by an electricity transmission or distribution utility. 3. Services by way of transportation of goods:

By road, except the services of a goods transportation or courier agency

By an aircraft or a vessel from a place outside India up to the customs station of clearance in India

By inland waterways Investment

India 2014 Business Outlook

Chrise Devonshire-Ellis, Founding Partner of Dezan Shira & Associates and Managing Partner of India Offices, points out that India path to economic recovery is inevitably paved with countless opportunities and risks. In contrast to China, which is a one-party state, India is a democracy and has not been able to elect a majority government in over twenty years. Such issues prevent India from making immediate reforms; yet perhaps these issues also enable it to take a more considered approach to its development. We have already seen the aftermath of the incredible growth of Chinaass pollution and growing degradation of the countryside and natural resources. By contrast, India wavering 5 to 7 percent growth has seemed rather sluggish. I believe that is a more sustainable and preferable growth pattern.

Firms seeking to take advantage of India increasingly liberal FDI environment should ensure they seek out the appropriate tax experts, accountants and business advisors. India is inheriting the work force dividend of cheap young labor that China has had over the past twenty years, and the demographics dictate that India is developing into a ust havedestination rather than an alternative.

After countless hours being bounced and shaken on dilapidated roads around India, Xu Huadong finds the country "interesting." "There is a huge gap between the rich and poor, but most people seem happy regardless of their wealth," says the chairman of Chinese machine and generator manufacturer Power HF.

"They also have a very good habit of saving. If something is wrong, they like to repair it, and will repair it many times. This provides a good opportunity for maintenance services."

Power HF, based in Weifang City, East China's Shandong Province, has exported 38,500 engines to India for use in telecom base stations across the country. If those base stations break down, more than 100 million Indian mobile users will be affected.

The firm has also set up a network of 174 service stations employing more than 1,500 local people across India to provide 24-hour maintenance services.

Founded in 1920, it has developed into one of the leading manufacturers of the off-highway diesel engines in China.

Its business in India started in 2007, when the Reliance Group, one of the top three telecom companies in India, ordered the engines.

In 2005, China's engine and generator industry saw a trend of excess production capacity as a result of massive investment at a time when Power HF was seeking opportunities overseas.

Like many other Chinese manufacturers, most of its business then was limited to exporting. The big order from India prompted a rethink.

"Buyers of complicated products like engines must need after-sales service. Most Chinese enterprises still depend on exporting products to make money, but international experience tells us that service is the source of more profit," says Xu.

Already well traveled, Xu conducted a thorough market investigation before deciding to open a service business in India.

The poor roads in India meant it often took more than seven hours to drive 200 kilometers. In some places, workers had travel on foot to repair the engines. Plus, India had a very complicated language system with more than 1,600 languages and dialects and foreign companies had no preferential policies.

But these conditions also offered opportunities. The backward infrastructure needed development. The population of 1.2 billion was a huge market. And English was an official language in the polyglot nation.

After finally deciding to open a branch in India, Xu spent about a year selecting management personnel.

"We didn't send any Chinese, because we needed personnel who spoke fluent English and had a deep understanding of India and the technology. It's too hard to find such people in China," says Xu.

Through introductions by friends, Xu interviewed many Indian candidates. "But I had an intuition that the Indian personnel had some doubts about our Chinese enterprise."

The Indian prospects were invited to China. After seeing the country's development and the modern enterprise, they were confident about working for Power HF.

The Indian market demands respect for the culture. "Indians value family. Whenever an Indian employee has a birthday, wedding, anniversary or illness, they ask for a leave. If there is contradiction between the needs of the employees and the company, we must be patient and respect the choice of the employees, because it's their culture," Xu says.

Competing with about five local rivals, the Chinese firm tries to win with high quality, timely and relatively cheap services.

However, with the appreciation of the RMB, Chinese companies are under pressure abroad.

Xu says the Indian rupee devalued about 20 percent at one stage in 2013, while the RMB appreciated 5 percent, eroding 25 percent of the gross profit margin.

"We are forced to improve management efficiency and lower operation costs. But there is a limit. Our price advantage is diminishing, and we are considering opening production plants globally," Xu says.

The Indian market now comprises more than 30 percent of the total revenue of Power HF, which has bigger plans.

"Currently we mainly provide maintenance services for the engines of the telecom base stations. In future, we hope to offer maintenance of air-conditioners, antennas and other equipment at the stations, based on our established network," says Xu.

He also wants to help other Chinese enterprises expand abroad. "The only way for Chinese equipment manufacturers to deal with the problem of excess production capacity is to go abroad," he says. "With our network and team in India, we can be sales and service agents of Chinese manufacturers of engineering and agriculture machinery, since the engine is the basis of their products," Xu says.

The firm is eying other countries and regions, with Africa as the next key market.

"We want to copy the successful model in India, but adjustments must be made according to the situation in different countries," Xu says.

When Power HF entered India, the enterprise redesigned its products according to the hot and humid environment. Since India has stricter noise restrictions, it also adjusted their engines to reduce noise.

"Now we are entering Egypt and we must take the heat, wind, sand and dust into consideration," says Xu, adding skilled workers were harder to find in Egypt than in India, so training maintenance workers will be given priority.

"The quality of Chinese machinery is already world level. But Chinese machinery manufacturers must focus on service if they want to go abroad," Xu says.

In 2013 biotechnology equities have seen tremendous growth, and investors are taking note as this year saw many biotech firms go public. To be clear, we believe that the U.S. biotechnology industry is in a current boom and it will continue for the next few years as the U.S. government continues to support the industry and as its demand across the globe continues to increase.

But before one invests in U.S biotech equities, one should know their history, how the U.S. political system has affected the industry, and the risk inherent in the sector.

The U.S. boom in biotechnology firms and stocks has come in the backdrop of the booming of various U.S. biotechnology sectors including medical biotechnology, agricultural biotechnology, and industrial biotechnology. Between 2001 and 2010, the U.S. bioscience industry grew by 6.4%, adding more than 96,000 jobs. By comparison, total employment for all private sector industries in the United States fell by 2.9%, losing more than 3 million jobs. The country medical biotechnology sector is continuing to see strong growth as the industry has established more than 87,000 new jobs by designing new biological drugs, vaccines and in-vitro diagnostics.

In the last two years there has been a wave of biotech IPOs that shows that the industry is quickly growing. In 2013 more than 30 biotech firms went public, the highest number since 2000. Indeed 2012 were the second best year in terms of biotech IPOs. Many of these firms are younger firms that are involved in research and development, which started performing well in the 2010-2012 period. Stocks such as Clobis Oncology, Inc. (CLVS), Tesaro, Inc. (TSRO and Aegerion Pharmaceutics, Inc. (AEGR) have gained 300-500% since they were launched.

Compared with a year ago, the NASDAQ Biotech Index which is weighted by market cap, is up 45%, the dollar-weighted Arca Biotech Index has risen 35%, and the Pharmaceutical Index of large U.S. and European drug makers' shares has increased 32%. Over the same time period, the S&P 500 Index has gained 25%. The biotech indexes in the U.S. are booming and investors are beginning to wonder if this rapid growth is short term and risky, or if it is a sustainable route of growth.

The rise of fast pace growth is triggering talk of a biotech bubble in the U.S. learly the biotechnology industry is providing a major opportunity for new drug development thus creating a significant boom in the industry,said Baron Laudermilk, Co-founder & Managing Director, Q Intel Research. his boom is different than the last ones since the demand for these innovative products and services continue to rise, and the U.S. has the talent and the know-how to fulfill this demand.

Regardless of the risk, with the Nasdaq Biotech Index trading well above its previous all-time peak in 2000 - just before the epic dot-com bust - many investors are thinking about capturing some of these fast growing profits out of the biotech industry in the United states.

The Obama Administration is partly credited for fueling a growth spurt of the U.S. biotechnology industry. Indeed a more favorable regulatory environment and lower capital costs are helping build the rally. The U.S. Food and Drug Administration (FDA) approved 39 drugs last year - a record beaten only in 1996. We estimate that interest costs for large-cap biotech to borrow in the capital markets are about 2% lower today than in 2007, and are likely to remain there for several more years.

The Strong Performance of Biotech Firms

For much of the last ten years, mutual funds in general avoided investing in biotech stocks due to the genomics bubble burst. Again, post 2010, the scenario has changed rapidly. The Nasdaq Biotech Index has outperformed other segments in a most conclusive fashion. The margin is close to 10,000 basis points or 100%. This means that general funds, investing across sectors, which have assigned lower weightages to their biotech holdings, have underperformed those with overweight positions. Sector specific funds, focusing solely on biotech, have performed even better.

The Long Term Case for Growth

The bulls believe that the biotechnology industry has many permanent, positive changes in the U.S. market that will continue to be the catalyst for growth in the county biotechnology industry.

Over the past fifty years, life expectancy figures have steadily increased across the world. This is primarily attributable to better access to healthcare. This trend is expected to continue and life expectancy will only increase over the years. This therefore will create many opportunities for pharmaceutical firms to continue to find ways to extend peopleslives.

As a result, the demand for healthcare will increase, particularly treatments for diseases related to advancing age such as cancer and Alzheimer disease. At the same time, income levels continue to rise and there is no reason why such treatments cannot command premium pricing.

Finally, the bull case rests on the belief that the US Food & Drug Administration will continue to approve more drugs and treatments under the Obama Administration. The regulator, which has taken steps to hasten its approval process, certified 39 drugs last year its most in a decade and has approved 20 more so far this year. However this will continue to happen as long as the U.S. has a democratic president. Historically Republican presidents have approved less drugs and treatments than democratic ones due to their belief that some of the drugs and biotechnology treatments conflict with their religious or ethical beliefs.

The Rising Opportunities in the U.S. Biotechnology Industry

While several companies will continue to face challenges like EU austerity measures and genericization, the pharma industry should be out of the worst of the genericization phase from 2013. Many companies, which had faced generic headwinds in the last couple of years, should see their results improve from 2013. Cost-cutting, downsizing, streamlining of the pipeline, growth in emerging markets and product approvals should support growth.

Among large-cap pharma stocks, Johnson & Johnson appears to be a good investment in 2013 and for at least the next year. The company has performed well in the first half of 2013 and the momentum should continue through the remainder of the year. The company has been trying to offset the declining sales of some of its important products by bringing in new products through in-licensing deals and acquisitions. We believe the diversity and strength of the company underlying businesses will continue to provide strong growth in future.

Forest Labs is doing well with first quarter fiscal 2013 results beating expectations. The company has launched several new products over the past few quarters and continues to make impressive progress with its pipeline.

In the biotech space, we are positive on Biogen (BIIG) Tecfidera, the company recently launched oral multiple sclerosis drug, is off to a strong start with launch quarter sales coming in at $192 million (including inventory stocking of $82 million). While Tecfidera has the potential to gain the top spot in the oral multiple sclerosis market, Avonex and Tysabri should continue contributing significantly to sales. Biogen is also progressing with its hemophilia pipeline.

We are also positive on Amgen (AMGN) Amgen should be able to deliver on its long-term strategy based on expansion in key markets, launch of new manufacturing technologies, and pipeline development. Enbrel should continue performing well. Amgen late-stage pipeline is also moving along.

Medivation (MDVN) should continue delivering with its prostate cancer therapy, Xtandi, performing well. Based on the data we have seen so far, we believe Xtandi has blockbuster potential. It is currently in several studies including for the pre-chemo setting. Expansion into the pre-chemo setting would be a major positive for Medivation.

Among generic companies, Actavis (ACT) looks well-positioned. We view the acquisition of Actavis Group as a smart strategic move and we believe the company will be able to achieve its guidance easily. We are also positive on the upcoming acquisition of Warner Chilcott (WCRX), which makes strategic and financial sense. With fewer major patent expiries slated to occur in the next few years, we are encouraged by Actavisfocus on building its branded and biosimilars pipeline.

Risk and Weaknesses

We recommend avoiding investing in firms that offer little growth or opportunity and that have failed to see a raise in their stock prices quickly after they went public. These include firms that are developing drugs and technologies that will more than likely run into regulatory issues by the FDA and other important U.S. regulators. Indeed FDA has been exercising more caution in granting approval to new products and several firms are facing delays in receiving final approval. So before investing in a firm, ensure that the appropriate U.S. regulator approves its products and services.

Bristol-Myers Squibb (BMY) is not performing well and we recommend that if you are investing in it, that you consider selling it. While the company second quarter results were in-line with expectations, Bristol-Myers cut its outlook for 2013 reflecting negative currency movement and the recall of Fervex, a local over-the-counter (OTC) product in France and other international markets. Moreover, Eliquisperformance has been disappointing. The Medicines Company (MDCO) appears to be having some problems gaining increasing its profit margins. Earnings estimates for this company have been declining with third quarter results expected to remain flat on a sequential basis.

Conclusion

The biotechnology industry in the United States is seeing rapid growth as capital cost decrease and as the White House continues to create a positive business and regulatory environment for them. As many of these new firms go public, a vast number of new opportunities are emerging for investors. The biotechnology industry is here to stay and will continue to grow at a reasonable rate for the next few years, as the United States continues to be the largest market and leading consumer of biotechnology products in the world.

*To learn more about Q Intel Research intelligence and insights into U.S. biotech funds, please contact Mr. Baron Laudermilk (blaudermilk@qintelresearch.com)